4 Stocks Set to Benefit From the PDT Rule Change

Key Points

• FINRA voted to overhaul the PDT rule, reducing the minimum day-trading account balance from $25,000 to a standard margin framework.
• The change could spark a retail trading boom, boosting penny stocks, brokerages, and retail favorites volumes.
• Key beneficiaries of the rule change could include Interactive Brokers, Robinhood, Charles Schwab, and retail trading favorite Tesla.

The Financial Industry Regulatory Authority (FINRA) recently voted to overhaul the Pattern Day Trading (PDT) rule, which required a $25,000 minimum account balance to execute four or more same-day trades in five business days. The new rule, pending final approval by the SEC, would shift to a standard intraday margin framework.

This could unleash a retail trading boom, boosting volumes in volatile penny stocks and the platforms enabling them. While penny stocks may see action, brokerages and retail favorites are likely to be the more prominent beneficiaries of the end of the PDT rule.

So let’s look at several stocks set to benefit from the proposed rule change.

Interactive Brokers: The Trader’s Powerhouse

Interactive Brokers NASDAQ: IBKR is a go-to choice for advanced traders and investors, offering fast execution and low-cost margin trading. While the company serves hedge funds, proprietary trading firms, and advisors, it also provides trading and investing services for individual traders. And that's precisely where the upside is with the rule change. 

Shares closed Monday’s session at a fresh all-time high, buoyed by the recent news. This year, the brokerage giant and S&P 500 member has been a clear leader, up 56% YTD. With the stock pushing to new highs and breaking out of a lengthy consolidation, it appears the leadership position will last well into the year-end. 

Analysts are bullish, with a consensus Moderate Buy rating, and overall sentiment is bullish thanks to recent tailwinds and an impressive Q2 earnings report. 

Robinhood Markets: Retail’s Favorite App

Robinhood NASDAQ: HOOD revolutionized trading with its commission-free model and exceptionally user-friendly app. It was a first-of-its-kind product, opening up the world of investing and trading to the masses. The PDT reform could drive a surge in new users, amplifying stock, options, and crypto trading volume. 

HOOD has been one of the best-performing S&P 500 stocks this year. YTD, the stock is up a whopping 266%, and like IBKR, it closed at a new all-time high on Monday. Having just broken out above $130 resistance, momentum is firmly behind the bulls' backs.

The proposed rule change will add to what has already been a stellar year of earnings for HOOD. In July, the company reported EPS of 42 cents, which beat analysts' consensus estimates by 12 cents.

Quarterly revenue rose 45.0% year-over-year to $989 million, above analyst estimates of $893.93 million.

Charles Schwab: The Reliable Giant

Charles Schwab NYSE: SCHW combines its widely popular thinkorswim platform with retail-friendly apps, ideal for handling PDT-driven volume. With over 37 million accounts, it’s built for scale. This trusted brokerage giant could be a significant beneficiary of the rule change, thanks to its hugely popular thinkorswim® platform and already enormous customer base.

While the stock hasn’t performed as well as the names mentioned above, it has still put in a firm showing for the year. YTD, SCHW has climbed 31%, easily outpacing the financial sector and broader market. More notably, however, is its current setup.

For several months, the stock has been consolidating near all-time highs, with $100 acting as the potential breakout level. With fresh news and clear outperformance, should the stock clear $100, it could spark further outperformance disconnectivity into year-end.

Tesla: The Retail Rocket

You can’t talk about a rule change that directly impacts retail trading the most, without mentioning one of retail traders' favorite stocks: Tesla.

Tesla NASDAQ: TSLA is a retail trading magnet, with 89 million shares traded daily and Elon Musk’s tweets driving swings.

PDT relief could amplify intraday trades, particularly on earnings or news releases. 

With the stock now back in the green on the year and showing signs of fresh leadership, the rule change could positively impact flows and follow-through on breakout attempts in the future.